Markets traded lower at the beginning of the week, with Chinese and Japanese equities leading losses in the region, amid the uncertainty surrounding the future pace of US monetary stimulus.

In China, HSBC's preliminary China manufacturing PMI dropped to 50.5 in December, against a final reading of 50.8 in November. The reading, the lowest in three months, weighed down on Chinese equities.

In Tokyo, a stronger yen pulled down Japanese exporters' stocks.

Japanese investors largely shrugged off a mixed outcome from the Bank of Japan's quarterly tankan survey. The results showed that sentiment among the nation's major manufacturers was at its highest in six years. However, it indicated that large companies had lowered their investment plans for the ongoing fiscal year.

Markets outside China traded higher on 17 December as positive economic data from the US and Europe boosted investor sentiment.

However, gains across the region were capped, ahead of the important US Federal Reserve policy decision.

Data from the US showed that factory output in November exceeded its prerecession peak for the first time, the latest signal suggesting America's economic recovery has gathered momentum.

November's industrial production reading was the biggest jump in a year.

The Aussie remained "uncomfortably high and a lower level would likely be needed to achieve balanced growth in the economy," the minutes said.

A bulk of all markets traded higher on 18 December, ahead of the conclusion of the Fed's last policy meeting for the year.

In Japan, the benchmark Nikkei index was boosted by speculation that Prime Minister Shinzo Abe could make public details of the so-called "third arrow" of a three-pronged strategy to boost growth in the world's third-largest economy.

In India, the benchmark Sensex was boosted by the Reserve Bank of India's (RBI) surprise move to leave its key lending rate and banks' cash reserve ratio unchanged.

Data from China showed that home prices continued to rise despite government measures aimed at cooling the property market. Prices of new homes rose 9.9% on an annual basis in November, reported Reuters. Home prices rose 9.6% in the preceding month.

Elsewhere, in Australia, central bank governor Glenn Stevens warned that an Australian dollar above 90 US cents was not apt for the economy.

In his biannual parliamentary testimony, Stevens said: "Looking ahead, resource sector investment will decline – gradually at first but more quickly thereafter. It will most likely fall considerably over the next few years. There is therefore scope for other forms of private demand to grow more quickly, the more so as government spending is scheduled to be subdued."

"Our expectation is that the below-trend growth in GDP we have seen for a while now will probably continue for a bit longer yet," Stevens added.

The Federal Open Market Committee (FOMC), the Fed's governing body, cited strong job growth in the US as the reason behind its decision.

The Fed decision weighed down on Asian currencies. The Japanese yen dropped to a near five-year low against the US dollar while Indonesia's rupiah dropped to a five-year low.

The Malaysian ringgit and the Philippine peso dropped to three-month lows, while the Indian rupee logged modest losses.

India's Finance Minister P Chidambaram said in a statement: "[The Indian] government is of the view that the [Indian] markets had already factored in the US Federal Reserve's decision and therefore is not likely to be surprised by these moderate changes."